Crypto Falls Last Weekend Results In Massive Futures Liquidation
The past week started very well for many digital assets, who seemed to have shaken off the nightmares of February. The leading and most valuable cryptocurrency had crossed the $60,000 for the first time last week. On the other hand, the leading altcoin- Ethereum, was also closing to chasing the $2,000 mark again amidst success in the last two weeks. However, a dip in fortunes that occurred last Sunday had resulted in the drop in values of some digital assets like Bitcoin, losing at least 7% in price value. According to Bybt- a crypto data analytics firm, the effect of this drop has now led to the loss of at least $2.25 billion in futures liquidation.
Traders unlikely to fund their trades during dips
Bitcoin, the leading crypto asset, which continues to be the toast of many investors, was laudable when it crossed the $60K mark for the first time last week. However, a general dip in fortunes of the general crypto market two days ago saw the cryptocurrency drop to about $56,231, barely 24 hours from its high of $60,750. The cryptocurrency has since dropped by another 6% in the last 24hours and currently hovers around the $55K mark.
Typically, the struggle did not elude altcoins, who have also witnessed a slight drop in their fortunes. Ethereum, which crossed the $1,800 mark last week, has witnessed a very slight unnoticeable decline in the last 24hours. The altcoin traded around $1,792 yesterday and is currently around $1,781 at the time of writing. Other altcoins like Polkadot’s DOT- currently trading around $33.34, amidst a 5% decline in the last 24hours, and Cardano- which also declined by 5% in the same period makes up the list.
However, this decline has been responsible for the liquidation in futures by many traders. The usual trend in the market, especially when experiencing a dip, is that exchanges will usually liquidate trading position. The situation is, however, aggravated, primarily when traders can no longer fulfill their margin requirement. According to the Bybt analysis, the correction to the situation is if traders source out funds from external sources to fund their trades, a solution that is not sustainable.
Any solution in sight?
The liquidation in futures which has resulted in a loss of at least $2 billion, will cost the cryptocurrency space. The recent decline in these digital assets’ fortunes has led to a general drop in the market cap of the cryptocurrency market, which stands roughly around $1.9 trillion. Bitcoin has fallen off the pace again from a $1 trillion market cap, like Ethereum, DOT, and many other altcoins have also contributed to the crypto market’s misfortunes. However, the market is currently not bleeding, and many analysts predict it will take shape before mid-week. On the other hand, buying at the dip will also help the market’s focus and likely bolster its market cap. However, many investors are not panicking, as everyone is optimistic about a market correction.